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What Is FINRA Arbitration?

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FINRA Arbitration Lawyer

How is FINRA arbitration different from a lawsuit in court? If you have a dispute with your stockbroker or brokerage firm, you typically cannot bring that claim to court. Instead, you will have to pursue the claim in mandatory, binding arbitration before the Financial Industry Regulatory Authority, known as FINRA.

When you hired your broker, you were given many documents to sign, including a mandatory arbitration agreement contained within the customer account opening documents. Essentially, this provision means that you have waived your right to go to court, and you must bring your claim to FINRA arbitration. Attorney Chad Kohler explains how your arbitrator or arbitrators are selected in the video below.

Understanding The FINRA Arbitration Process

There are seven steps involved in the FINRA arbitration process:

  1. The claimant initiates arbitration by filing a statement of claim that includes relevant facts of the complaint and the remedies requested for the dispute.
  2. Respondent answers the arbitration claim by filing an answer that includes relevant facts and defenses to the dispute.
  3. The arbitration selection process begins with each party receiving a list of potential arbitrators, and a panel is selected to hear the case.
  4. Prehearing conferences are necessary for arbitrators and parties to schedule hearing dates and resolve any preliminary conflicts and issues.
  5. Discovery is a process in which documents and information are exchanged to prepare for the arbitration hearing.
  6. Hearings are the opportunity for parties and arbitrators to meet in person and present arguments and evidence in the dispute.
  7. Arbitrator deliberation will begin after arbitrators have all the case facts and will then offer a written decision called an award.

How an Experienced FINRA Arbitration Lawyer Can Help You Recover Your Investment Losses

FINRA arbitration is different from court in many ways. The case won’t be in front of a judge or jury; instead, it will be heard in front of an arbitration panel consisting of one to three individuals depending on the size of your claim. The arbitration panel is made up of a pool of professionals from all backgrounds. Arbitrators might or might not be lawyers. They will listen to the testimony and evidence presented by both sides before reaching a decision. The panel’s decision is referred to as an award, and it is final and binding. The FINRA arbitration process is streamlined and, generally, is faster than going to court. If you win an arbitration award, it is required paid to you within 30 days after the award is issued.

There are only very few circumstances in which an arbitration award can be challenged as opposed to court cases that may be subject to years of appeals. Because it is a faster process, the costs associated with bringing a case are often much lower than court cases. The broker or brokerage firm will most certainly have an experienced securities lawyer defending them. It is vital that you have an experienced investment fraud arbitration attorney who knows the ins and outs of FINRA arbitration on your side, protecting your interests and fighting for your rights. A lawyer who may be very experienced in other types of civil trial work but who does not have extensive experience in representing investors against brokerage firms will face a significant uphill battle to learn the law in this area and the procedures of FINRA arbitration.

Why You Need a FINRA Arbitration Lawyer

You can learn more about the FINRA arbitration process by exploring our website and if you have a case against your broker or brokerage firm, contact us for a free consultation. Whatever you decide, hire an attorney with substantial experience in this area of the law in order to level the playing field in your fight against the securities industry to recover your losses caused by investment misconduct.

You can also learn more about the difference between FINRA Complaints and FINRA Arbitrations by watching this video from attorney Courtney Werning.


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